A company makes two products 1 and 2. The finishing activity pool has estimated manufacuring costs of $85,557 and the cost drivers for Product 1 is 346 and 237 for Product 2. The assembling activity pool has estimated costs of $67,616 and the cost drivers for Product 1 is 200 and 300 for Product 2. Direct labor hours for Product 1 is 311and 107 for Product 2. What is the total manufacturing overhead cost to be assigned to Product 1 using a single overhead rate as under tradional cost accounting? Round your final answer to the nearest whole dollar and do not put a dollar sign in your answer.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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A company makes two products 1 and 2. The finishing activity pool has estimated manufacuring costs of $85,557 and the cost drivers for Product 1 is 346 and 237 for Product 2. The assembling activity pool has estimated costs of $67,616 and the cost drivers for Product 1 is 200 and 300 for Product 2. Direct labor hours for Product 1 is 311and 107 for Product 2. What is the total manufacturing overhead cost to be assigned to Product 1 using a single overhead rate as under tradional cost accounting? Round your final answer to the nearest whole dollar and do not put a dollar sign in your answer.
 
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Solution:

Total estimated overhead costs = $85,557 + $67,616 = $153,173

Budgeted direct labor hours = 311 + 107 = 418

Predetermined overhead rate = Estimated overhead / Estimated direct labor hours

= $153,173 / 418

= $366.4426 per direct labor hour

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